Vecima Reports Q3 Fiscal 2019 Results

• Revenue - $20.3M, Gross Margin 52.6%, Cash Balance: $47.2M
• Entra Remote PHY Node and Monitor driving forward in lab evaluations at multiple operators
• Q3 revenue for Video and Broadband Solutions increased 78% from Q2

VICTORIA, May 9, 2019 /CNW/ - Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology solutions, today reported financial results for the three and nine months ended March 31, 2019.

FINANCIAL HIGHLIGHTS

(Canadian dollars in millions except percentages, employees, and per share data)	Q3FY19	Q2FY19		Q3FY18
Revenue	$20.3	$22.7		$24.1
Gross Margin	52.6%	56.7%		51.3%
Net (Loss)/Income	($1.5)	$2.1		$0.7
(Loss)/Earnings Per Share^1	($0.07)	$0.09		$0.03
Adjusted (Loss)/Earnings Per Share^1, 2	($0.07)	$0.08		$0.03
Adjusted EBITDA^2	$0.4	$5.5		$3.8
Cash and Short-term Investments	$47.2	$44.5		$64.1
Employees	390	389		410
^1Based on weighted average number of shares outstanding. ^2Adjusted (Loss)/Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See "Adjusted EBITDA and Adjusted (Loss)/Earnings Per Share" below

"We made significant progress in the third quarter as we position Vecima for industry leadership both in the DOCSIS 3.1 Distributed Access Architecture ("DAA") market and in the IP video content delivery and storage space," said Sumit Kumar, Vecima Networks' President and CEO.

"Our Entra products are well along the commercialization path and provide industry leading features and performance to cable operators. We remain highly focused on realizing near-term opportunities with customers that are closest to a DAA transition. Our R&D priorities are closely aligned with this objective and we continue to see field trial activity building in calendar 2019."

"In our Content Delivery and Storage segment, third quarter sales were lower than anticipated. As is typical for this segment, revenues varied significantly from our record Q2 results, largely as a result of order timing. We expect revenue momentum to resume in Q4 and continue to anticipate strong contribution from this segment on a full-year basis."

BUSINESS HIGHLIGHTS

Video and Broadband Solutions

• Continued progress on Entra DAA family of products
• On-site lab engagement with a diverse group of Tier 1 and Tier 2 cable operators
• Entra Remote PHY Node and Remote PHY Monitor have entered next series of formal lab evaluations
• On track to move to DAA field trials with several customers
• Significant deployment of TC600E with Tier 1 customer undertaking an MPEG-4 densification program
• Market leading Terrace family of commercial video platforms continue wide adoption across largest operators

Content Delivery and Storage

• Quarterly revenue fluctuation related to order timing; revenue momentum expected to resume in Q4 as overall penetration of IPTV continues

Telematics

• Completed installation of PathView, our winter operations tracking interface, as part of our fleet management solution for the City of Victoria

Added Mr. Kumar, "Across the company we are focused on realizing the emerging opportunities in our core markets. In our Video and Broadband Solutions segment, some of the larger cable operators have been delayed in their roll out to DAA, though a number of operators are now making definitive progress toward field trials and deployment. Vecima is prepared for the first revenue opportunities as they become available."

"In our Content Delivery and Storage segment, we are also making excellent strides in the IPTV market and continue to see an expansive pipeline of new opportunities in the U.S., European, Latin American and Asia–Pacific markets."

"We intend to keep investing in Vecima's future while continuing to assess attractive acquisitions in emerging technology that will complement and augment our existing product lines, helping to drive our growth and success," said Mr. Kumar.

As previously reported, Vecima's Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on June 17, 2019 to shareholders of record as at May 24, 2019.

CONFERENCE CALL

A conference call and live audio webcast will be held today, May 9, 2019 at 1 p.m. ET to discuss the Company's third quarter results. Vecima's unaudited condensed consolidated financial statements and management's discussion and analysis for the three and nine months ended March 31, 2019 are available under the Company's profile at www.SEDAR.com, and at www.vecima.com/financials/.

To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20190509.html and will be archived on the Vecima website at http://www.vecima.com/shareholder-events/

About Vecima Networks
Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world's leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high‑capacity broadband network access, and streamline data analytics. For more information, please visit our website at www.vecima.com.

Adjusted EBITDA and Adjusted (Loss)/Earnings Per Share
Adjusted EBITDA and Adjusted (Loss)/Earnings Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted (Loss)/Earnings Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company's financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted (Loss)/Earnings Per Share, investors should refer to Vecima's Management's Discussion and Analysis for the third quarter of fiscal 2019.

Forward-Looking Statements
This news release contains "forward-looking information" within the meaning of applicable securities laws.  Forward-looking information is generally identifiable by use of the words "believes", "may", "plans", "will", "anticipates", "intends", "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions.  Forward-looking information in this news release includes the following statements: We made significant progress in the third quarter as we position Vecima for industry leadership both in the DOCSIS 3.1 Distributed Access Architecture ("DAA") market and in the IP video content delivery and storage space; our Entra products are well along the commercialization path and provide industry leading features and performance to top Tier cable operators;  we remain highly focused on realizing near-term opportunities with customers that are closest to a DOCSIS 3.1 DAA transition; our R&D priorities are closely aligned with this objective and we continue to anticipate field trials in calendar 2019; as is typical for this segment, revenues varied significantly as a result of order timing; we expect revenue momentum to resume in Q4 and continue to anticipate strong contribution from this segment on a full-year basis; we are on track to move to DAA field trials with several customers; market leading Terrace family of commercial video platforms continue wide adoption across largest operators; quarterly revenue fluctuation related to order timing; revenue momentum is expected to resume in Q4 as overall penetration of IPTV continues; we are focused on realizing the emerging opportunities in our core markets; some of the larger cable operators have been delayed in their roll out to DAA; a number of operators are now making definitive progress towards field trials and deployment; Vecima is prepared for the first revenue opportunities as they become available; we are making excellent strides in the IPTV market for and continue to see an expansive pipeline of new opportunities in the U.S., European, Latin American and Asia–Pacific markets; we intend to keep investing in Vecima's future while continuing to assess attractive acquisitions in emerging technology that will complement and augment our existing product lines, helping to drive our growth and success.

A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading "Risk Factors" in the Company's Annual Information Form dated September 27, 2018, as well as the Company's continuous disclosure filings with Canadian securities regulatory authorities available at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

 

Vecima Networks Inc.
Condensed Interim Consolidated Statements of Financial Position
(unaudited - in thousands of Canadian dollars)
		March 31, 2019	June 30, 2018
Assets
Current assets
Cash and cash equivalents		$            19,033	$            11,034
Short‑term investments		28,143	46,660
Accounts receivable		15,213	17,997
Income tax receivable		2,453	2,519
Inventories		14,567	15,020
Prepaid expenses		2,355	1,658
Contract assets		216	-
		81,980	94,888
Non‑current assets
Property, plant and equipment		11,489	12,105
Goodwill		15,047	14,903
Intangible assets		67,765	62,324
Other long‑term assets		996	788
Investment tax credits		24,275	22,692
Deferred tax asset		2,828	2,339
		$          204,380	$          210,039
Liabilities
Current liabilities
Accounts payable and accrued liabilities		$            10,543	$            12,151
Deferred revenue		4,969	4,206
Provisions		349	520
Income tax payable		5	358
Current portion of long‑term debt		250	250
		16,116	17,485
Non‑current liabilities
Deferred revenue		824	524
Provisions		327	352
Deferred tax liability		33	414
Long‑term debt		1,792	1,979
		19,092	20,754
Shareholders' equity
Share capital		1,754	1,756
Reserves		4,143	4,041
Retained earnings		177,921	182,411
Accumulated other comprehensive income		1,470	1,077
		185,288	189,285
		$          204,380	$          210,039

 

Vecima Networks Inc.
Condensed Interim Consolidated Statements of Income
and Other Comprehensive Income
(unaudited - in thousands of Canadian dollars except net income per share data)
			Three months ended March 31,			Nine months ended March 31,
			2019		2018	2019		2018
Sales			$       20,328		$    24,124	$       64,317		$       53,758
Cost of sales			9,642		11,743	29,600		25,179
Gross profit			10,686		12,381	34,717		28,579
Operating expenses
Research and development			4,797		4,466	13,967		10,674
Sales and marketing			4,029		4,015	10,481		6,236
General and administrative			4,247		4,119	12,256		9,269
Restructuring costs			-		-	757		-
Share‑based compensation			28		22	102		49
Other expense (income)			(69)		(54)	(435)		(225)
			13,032		12,568	37,128		26,003
Operating (loss) income			(2,346)		(187)	(2,411)		2,576
Finance (loss) income			301		237	550		921
Foreign exchange (loss) gain			(619)		846	457		476
(Loss) income before income taxes			(2,664)		896	(1,404)		3,973
Income tax (recovery) expense			(1,203)		194	(898)		978
Net (loss) income from continuing operations			(1,461)		702	(506)		2,995
Net income from discontinued operations			-		1	-		7,064
Net (loss) income			(1,461)		703	(506)		10,059
Other comprehensive (loss) income
Item that may be subsequently reclassed to net income
Exchange differences on translating foreign operations			(584)		627	393		627
Comprehensive (loss) income			$       (2,045)		$     1,330	$          (113)		$       10,686
Net (loss) income per share
Continuing operations			(0.07)		0.03	(0.02)		0.13
Discontinued operations			-		-	-		0.32
Total basic net (loss) income per share			$         (0.07)		$       0.03	$         (0.02)		$           0.45
Continuing operations			(0.07)		0.03	(0.02)		0.13
Discontinued operations			-		-	-		0.32
Total diluted net (loss) income per share			$         (0.07)		$       0.03	$         (0.02)		$           0.45
Weighted average number of common shares
Shares outstanding ‑ basic			22,355,755		22,443,158	22,378,195		22,423,255
Shares outstanding ‑ diluted			22,355,755		22,480,304	22,378,195		22,473,428

Vecima Networks Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(unaudited - in thousands of Canadian dollars)
		Share capital	Reserves	Retained earnings	Accumulated other comprehensive income	Total
Balance at June 30, 2017		$          803	$       3,965	$    177,474	$                    -	$    182,242
Net income		-	-	10,059	-	10,059
Other comprehensive income		-	-	-	627	627
Dividends		-	-	(3,701)	-	(3,701)
Share repurchased and cancelled		(6)	-	(592)	-	(598)
Shares issued by exercising options		13	(4)	-	-	9
Shares issued in exchange for short‑term investments		948	-	-	-	948
Share‑based compensation		-	49	-	-	49
Balance at March 31, 2018		$       1,758	$       4,010	$    183,240	$                627	$    189,635
Balance at June 30, 2018		$       1,756	$       4,041	$    182,411	$             1,077	$    189,285
IFRS 15 transition		-	-	(102)	-	(102)
Adjusted balance at July 1, 2018		1,756	4,041	182,309	1,077	189,183
Net loss		-	-	(506)	-	(506)
Other comprehensive income		-	-	-	393	393
Dividends		-	-	(3,690)	-	(3,690)
Share repurchased and cancelled		(2)	-	(192)	-	(194)
Share‑based compensation		-	102	-	-	102
Balance at March 31, 2019		$       1,754	$       4,143	$    177,921	$             1,470	$    185,288

Vecima Networks Inc.
Condensed Interim Consolidated Statements of Cash Flows
(unaudited - in thousands of Canadian dollars)
		Three months ended March 31,		Nine months ended March 31,
		2019	2018	2019	2018
Cash flows from operating activities
Net (loss) income from continuing operations		$    (1,461)	$         702	$       (506)	$      2,995
Adjustments to reconcile net income to cash from operating activities		1,642	2,790	6,872	6,299
Decrease (increase) in other long‑term assets		197	26	(10)	26
Decrease in provisions		(69)	(4)	(206)	(219)
Increase in investment tax credit		(30)	(63)	(78)	(196)
Net‑change in non‑cash working capital relating to operations		8,448	7,004	2,259	10,529
Interest paid		(23)	(23)	(74)	(66)
Interest received		242	260	773	907
Income tax received		-	-	409	-
Income tax paid		(342)	-	(799)	-
Net cash provided by continuing operations		8,604	10,692	8,640	20,275
Net cash provided by discontinued operations		-	1	-	73
Net cash provided by operations		8,604	10,693	8,640	20,348
Cash flows from investing activities
Purchase of property, plant and equipment		(699)	(782)	(1,789)	(1,250)
Proceeds from sale of property, plant and equipment		5	68	8	71
Purchase of short‑term investments		(263)	(35,969)	(1,681)	(44,190)
Proceeds from sale of short‑term investments		8,571	42,386	20,198	80,677
Deferred development costs		(4,322)	(4,418)	(13,195)	(11,596)
Purchase of intangible assets		(40)	(84)	(85)	(124)
Business acquisition		-	(102)	-	(37,379)
Proceeds from sale of intangible assets		-	-	202	-
Net cash provided (used) by continuing operations		3,252	1,099	3,658	(13,791)
Net cash provided by discontinued operations		-	-	-	8,732
Net cash provided (used) by investing		3,252	1,099	3,658	(5,059)
Cash flows from financing activities
Proceeds from exercised stock options		-	3	-	9
Proceeds from government grants		147	-	147	49
Repurchase and cancellation of shares		(77)	(591)	(194)	(598)
Repayment of long‑term debt		(41)	(62)	(187)	(166)
Proceeds from issuing shares		-	-	-	948
Dividends paid		(1,229)	(1,234)	(3,690)	(3,701)
Net cash used by financing		(1,200)	(1,884)	(3,924)	(3,459)
Increase in cash and cash equivalents during the period		10,656	9,908	8,374	11,830
Effect of change in exchange rate on cash held		353	(406)	(375)	(406)
Cash and cash equivalents, beginning of period		8,024	5,439	11,034	3,517
Cash and cash equivalents, end of period		$     19,033	$     14,941	$     19,033	$     14,941

SOURCE Vecima Networks Inc.

Vecima Networks, Investor Relations - 250-881-1982, [email protected]